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Lefteris Papadimas, REUTERS

Jul 29, 2012

, Last Updated: 5:20 AM ET

ATHENS - Political leaders in Greece have agreed on most of the austerity measures demanded by its creditors and are now eyeing pension and wage cuts to find the final 1.5 billion Euros of savings still needed, a source close to the talks said on Sunday.

Greece must find savings worth 11.5 billion Euros for 2013 and 2014 to satisfy its increasingly impatient lenders who are currently on a visit to Athens to evaluate the country’s progress in complying with the terms of its latest bailout.

Prime Minister Antonis Samaras’s government last week managed to draw up a list of measures to achieve those savings, but the three parties in his conservative-led administration failed to agree on them, and are to due to resume talks on Monday.

“The political leaders don’t disagree on anything, there are just alternative proposals being discussed to protect those with low pensions or incomes in the public sector,” said the source, who is involved in the talks. “We need measures worth 1.5 billion Euros to finalize the 11.5 billion euro package.”

Near-bankrupt Greece is fighting an increasingly desperate battle to convince skeptical European Union and International Monetary Fund lenders it has turned over a new leaf and is ready to push through long-delayed reforms to overhaul its recession-hit economy.

But the lenders have so far appeared far from convinced, and officials have told Reuters the country is likely to require a new debt restructuring that the euro zone - faced with market turmoil in Italy and Spain as well - can ill afford.

Greek media have reported that the country’s leaders are discussing possible layoffs of contractors in the public sector, a cap on pensions, cuts in welfare benefits, reductions in tax exemptions, and lower salaries for public employees as well as raising the retirement age by a year to make up for the shortfall in savings.

PRESSURE ON CASH RESERVES

With a decision on a new tranche of aid to Greece not expected until September, the country’s already dire financial position appears to be getting increasingly precarious.

“The fact that we have not received the agreed aid instalments has put pressure on our cash reserves. Until then, we are taking extra care in managing our cash,” Deputy Finance Minister Christos Staikouras told Real News weekly.

The so-called troika of EU, European Central Bank and IMF lenders is due to wrap up its visit to Athens in the coming days and return in September to complete its assessment of whether Greece deserves more aid.

A fifth year of recession, record unemployment levels, and repeated waves of austerity cuts have fuelled growing anger towards the troika and the austerity medicine it has insisted on.

Summing up the dark public mood, the GSEE union on Friday lambasted the troika for heaping misery on Greeks, after the two sides held talks.

“We agreed on one thing - that we disagree on everything,” Yannis Panagopoulos, the head of the GSEE union, said in a statement. “The troika men came to Greece as doctors and prescribed the medicine that would save the Greek economy and people, but in the end they proved to be charlatans.” REUTERS